Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

“U.S. consumers also stand to gain from lower retail fuel prices. This may sound counterintuitive —how can fuel prices fall if crude oil becomes more expensive”

No it both is and sounds like BS. Your thin twisted concoction of arguments desperately trying to make the case for your oily Dallas masters, does not hold up. Yes you may be able to cherry-pick a single incident where lower crude prices did not immediately translate into lower gas prices because there are other parameters that influence end-product pricing. However, in the big picture and long-term there is an undeniable correlation between what the raw oil material cost and what the refined end-products cost at the retail level. The twisted manipulation of market forces can only hold so long. There is also a simple and undeniable law of supply, demand and market forces that explain why higher cost of raw materials end up as higher cost of refined end-products.

So tell your masters that they cannot take American crude oil and sell it for higher profits to foreigners (and in the process increase gas prices for the same people who originally gave them permission to take that oil out of the ground). They should be happy that they managed to bribe politicians to allow export of end-products out of our country. Maybe you can explain why it is so good for America that you are allowed to export refined products rather than selling them at a lower price to foreigners. After you also fail that task lets discuss an export tax of 10% on any refined oil product that leaves the country. If we allow you to make profit on hurting America, then the least we can do is to demand a cut of the profit.

I know this guys masters told him to produce a report that would explain why we should get rid of that old law and allow them to export American oil and jobs, so they could further enrich themselves at our expense. An official document from an “esteemed” organization would be perfect political cover for their little sock puppets in congress.

However, this is so much more. It demonstrates that the old capitalism dogma of “supply and demand makes prices” is false. Capitalism doen’t work!! – question is should we fix it or abandoned it? This clearly calls for more than a law that allows additional robbing and raping of America. It is clear from this report that we need laws that will either fix or abandon capitalism – the old ship is sinkin’.

So by your logic we shouldn’t export say wheat? Last term in the GDP equation (ECON 101) is (E-I). Guess what E is? NB: we already export hydrocarbon products, notably Diesel and Jet Fuel. Ban those too? Your tirade about broken Capitalism. Look at China now vs. 20 years ago, not to mention South Korea.

Wheat is not comparable to oils. We produce much more wheat than we can use ourselves. Furthermore, the wheat crop is a renewable resource that either is produced or lost forever every year – we cannot just keep it in the ground. Finally there is a fairly limited spread between cost and delivery prices so a larger domestic supply would reduce prices by a very small amount, before it simply squeezed out producers. So wheat is a great example of what we should produce and export, in contrast to oil which is a perfect example of what we should not allow rich oligarchs to exploit and export to the detriment of our children and their future.

Trying to artificially cap exports will hurt American independent producers, who drill 95 percent of U.S. wells. It will end up shutting in production and shutting down development. Again, we import much more crude that we’ll ever (if) export. UK is roughly crude oil neutral, I wished we’d be there, than our trade deficit would be looking much better. US domestic production is dominated by INDEPENDENTS, the majors’ main operations (Exxon, Chevron, Conoco, that’s all; Shell and BP and CITGO are foreign) are overseas. Independents produce the majority of crude here. OK, you don’t like the wheat analogy; what other natural resources would you want to not be exported? Lumber? Gold? Bauxite? Coal? NatGas? US is second in the world as an IMPORTER of natural resources (18% of world’s) and a measly fourth after Canada and even EU as an exporter see http://www.wto.org/english/res…/ersd201207_e.pdf

Yes the big fat rich “independent” producers would take less of a profit if we continue to ban export of crude oil. But that has so far not kept them from drilling. Even if the drilling were to be kept somewhat less (than it would otherwise have been) that is a good thing, not bad. Leaving some of that marginal oil in the ground for our grandchildren and their children is a very good idea since we know that it is only “renewable” in the context of hundreds of millions of years. No need to do the Easter Island thing so a few fat rich oligarchs can indulge themselves a little more here and now.

The author is correct that the current oil boom in North Dakota is creating all sorts of pretty entertaining regional distortions in oil and transportation markets. But it’s rather unclear what removing the export ban would do to the benefit of consumers except create a very slight additional incentive to build pipelines to move that oil, pipelines which are being built anyway without that incentive.

So what’s the point, beside allowing oil production businesses to make a quick buck faster?

The export ban is here for a very good reason, so that US oil production is transformed at home, with all of the added value of refining kept in the country. It’s a perfectly self-evident goal for a resource-rich developed country like the US, which has no difficulty to invest in the transformation business. We’re not Saudi Arabia or Nigeria, for Pete’s sake !

More interesting, on page 3, the author brings attention to the somewhat shaky applicability of the export ban. The wording is narrow and outdated so some operators have gained the ability to export not-quite-crude oil by what is mostly a technical and legal sleight of hand.

Namely, the ruling concerns so-called condensate, a type of very light crude oil associated with natural gas production which has to be minimally processed to allow its transportation in unpressurized tanks. Thus, by magic of this minimal amount of processing (basically, a topping to remove the C4- fractions), the raw condensate becomes a ‘product’ and thus can be exported, even though the only reason for this processing is to be able to export it by tankers in the first place…

It means that an update is very much needed to this statute to narrow the notion of oil products to mean either fully finished products, distillates and lighter, salable as-is to end consumers, or high-value ‘super-refined’ intermediates, products like alkylate or PX.

But exports of non-fully refined products should be banned outright. By the by, the ban should also include non-bunker fuel oil. The glut in heavy-ends refining capacity on the Gulf Coast, a glut that seems to worry the author very much, would disappear very quickly.

So, a pretty weak paper by an economist who forgets 1) who’s paying his bills and 2) that US natural resources are meant to be exploited for the benefit of the American people, not that of the almighty market. The full value must be realized in the US, not somewhere in Asia.

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About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

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